Reinsurance Recovery Calculation
When a claim's loss amount is large enough to reach a reinsurance treaty's attachment point, calculating what's actually recoverable from the reinsurer means applying the treaty's specific retention, layer structure, and any aggregate or per-occurrence limits correctly — a calculation that gets genuinely complicated with multiple layers, quota-share splits, or a loss that could trigger more than one treaty. Doing this by hand for every qualifying claim is slow and, because treaty terms vary and get amended, error-prone in a way that either leaves real recoverable money uncollected or, worse, over-bills a reinsurer for an amount the treaty doesn't actually support, which damages the relationship and invites its own dispute.
STARTING PRICE
From €799
Complex tier · Multi-system orchestration, custom logic, and higher-volume or higher-risk processing.
Get a quote →Saves roughly 4-8 hrs per qualifying large-loss claim in recovery calculation.
How the automation works
We calculate expected reinsurance recovery for every claim that reaches a treaty's attachment threshold, applying the specific treaty's retention, layer structure, and any aggregate limits or reinstatement provisions currently in effect, cross-checked against the claim's incurred loss and reserve figures as they develop. Where a loss could plausibly trigger multiple treaties or layers, the calculation shows the allocation across each rather than picking one by default. Every calculated recovery figure is presented with the specific treaty clauses applied and the math shown, and routed to the reinsurance or finance team for sign-off before any recovery is actually billed to the reinsurer — this produces the calculation and the audit trail behind it, not the final billed demand, since treaty interpretation on an edge case is a judgment call that belongs with the team managing that relationship.
Process flow
- 01
Claim reserve crosses treaty attachment threshold trigger
As a claim's incurred loss or reserve estimate develops and approaches or crosses a treaty's attachment point, recovery calculation is triggered for review.
- 02
Map claim to applicable treaty terms integration
The claim is matched against the specific treaty or treaties potentially applicable based on line of business, loss date, and layer structure currently in effect for that period.
- 03
Calculate recovery against retention and layers ai
Recoverable amount is calculated applying the treaty's retention, layer attachment and exhaustion points, and any aggregate limits or reinstatement provisions, with allocation shown across multiple layers or treaties if more than one applies.
- 04
Attach applied clauses and math detail ai
The calculation is presented with the specific treaty clauses applied and the underlying math shown step by step, so the figure is checkable against the treaty wording, not a black-box number.
- 05
Route to reinsurance/finance for sign-off output
The calculated recovery routes to the reinsurance or finance team for review and sign-off before any recovery demand is billed to the reinsurer — edge-case treaty interpretation stays a human decision.
Inputs
- Claim incurred loss and reserve development data
- Reinsurance treaty terms, layers and limits
- Treaty effective period and amendment history
- Prior recovery calculation and billing history
Outputs
- Calculated recovery amount with treaty clauses applied
- Multi-layer/multi-treaty allocation breakdown
- Sign-off routing for finance/reinsurance review
- Recovery calculation audit trail
Works with
Prefer a fully custom build instead of an off-the-shelf integration? We scope both options during your free consultation — most jobs like this one work fine on standard connectors, but higher-volume or non-standard systems sometimes need bespoke API work, reflected in the complex tier.
Where this goes wrong if you get it wrong
- A claim's reserve estimate changes as the claim develops, and a recovery calculated against an early reserve figure can be materially wrong once the claim matures — recovery calculation needs to re-run as reserve estimates update, not be treated as a one-time calculation locked in at first attachment.
- Treaty terms get amended, and applying an outdated version of the retention or layer structure to a claim from a period governed by different terms produces a wrong recovery figure that looks confidently correct — the treaty version applied needs to match the claim's specific loss date and the terms actually in effect then, not just the current treaty on file.
- A large loss that could plausibly trigger more than one treaty or layer needs its allocation shown explicitly across each rather than the calculation defaulting to whichever treaty is checked first — picking one treaty when multiple genuinely apply either under-recovers or misallocates in a way that creates real accounting and relationship problems with reinsurers.
- No recovery figure should be billed to a reinsurer without finance or reinsurance team sign-off — treaty wording often has genuinely ambiguous edge cases (what exactly counts toward an aggregate, how a specific loss type is classified under the treaty), and an automated calculation presenting a confident number on an ambiguous case without flagging the ambiguity risks a dispute that damages the reinsurer relationship.
Frequently asked questions
Does this bill the reinsurer for the recovery automatically?
No — it calculates the recovery figure with the applied treaty clauses and math shown, but every recovery routes to the reinsurance or finance team for sign-off before anything is billed to the reinsurer.
How does it handle a loss that could trigger more than one treaty or layer?
It shows the allocation breakdown across each applicable treaty or layer rather than defaulting to a single one, since picking incorrectly can either under-recover or misallocate the claim.
What happens if the treaty terms were amended during the policy period?
The calculation applies the specific treaty version in effect on the claim's actual loss date, not necessarily the current treaty terms on file, since amendments can change retention or layer structure between periods.
Does this replace our reinsurance team's judgment on ambiguous treaty wording?
No — genuinely ambiguous treaty interpretation, like how a specific loss type is classified under the treaty, stays a human decision. This produces the calculation and supporting detail to inform that decision, not a final answer on edge cases.